Accounting Multiple Choice Question – 6 April 2021

The home of multiple choice questions for all your KS3, KS4 and KS5 Business Studies, Economics and Accounting requirements.

apple devices books business coffee
Photo by Serpstat on Pexels.com

A limited company purchases a partnership.

It issues to the partners 10 % debentures and pays them cash in full settlement of the purchase price. 

Which of the following is true?

Select ONE answer:

  1. The company’s gearing is reduced.
  2. The company intended to expand its business.
  3. The company’s reserves are reduced.
  4. The partners now own some of the equity in the company.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 2

  1. Not correct
  2. Correct
  3. Not correct
  4. Not correct

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.